Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/198995 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7635
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
The rebound effect is a well-known behavioral response whereby potential energy savings from efficiency improvements are partially offset by increased consumption of energy services, as the marginal cost of energy services is reduced. This paper characterizes a similar rebound effect related to installation and operation of a residential photovoltaic (PV) system. This solar rebound effect is different from traditionally studied rebound effects, primarily because it is due not to an improvement in the energy efficiency of a household’s appliances, but to the supply of a zero-marginal-cost perfect substitute for grid electricity. The solar rebound effect is first derived in the absence of any subsidization mechanism. We then modify the model to account for two commonly implemented incentives: installation rebates and net metering. Rebates are shown to increase the rebound effect, whereas the effect of net metering depends on the per-unit compensation rate.
Subjects: 
rebound effect
solar energy
residential photovoltaic systems
net metering
investment tax credit
JEL: 
Q41
Q42
Q48
Document Type: 
Working Paper
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